As global power shifts, Washington needs a new strategy, and a new way of managing its alliances.

Even as NATO heads of state prepare to discuss Russia and global terror at their annual summit this month, a deeper issue is haunting America’s allies around the globe: their relative military and economic decline over the past two decades — and the increasingly sharp geopolitical challenges this poses for the United States.

To understand this problem, it helps to go back to the early post-Cold War era, when the strengths of Washington and its allies were at their peak. In the mid-1990s, America’s core treaty allies—the NATO countries, the members of Washington’s bilateral alliance system in the Asia-Pacific, and Taiwan—accounted for nearly half of global GDP and over 35 percent of global military spending. Close allies such as the United Kingdom, Germany, France, and Japan constituted the largest economies in the world after the United States, and in many cases boasted impressive military and power-projection capabilities. America’s foremost adversaries and potential adversaries, meanwhile, were generally either weak or in precipitous decline. The Cold War left the United States not simply the world’s unipolar power, but the head of a “unipolar concert” of strong and vigorous democracies.

Times change, however, and so has the global distribution of economic and military power. America’s closest and most powerful allies have seen their shares of global GDP and military power fall since the mid-1990s, due to slow or stagnant growth and—in Europe especially—prolonged disinvestment in defense. More broadly, U.S. allies in both Europe and the Asia-Pacific have seen their economic and military power decline relative to Russia and China, America’s most prominent rivals. From 1994 to 2015, U.S. allies’ combined share of global GDP fell from 47 percent to 39 percent, and their share of global military spending from 35 percent to 25 percent. Meanwhile, China’s astounding economic and military ascent and Russia’s military buildup have propelled those countries’ combined share of world GDP from 5.5 percent to 14 percent and of military spending from 6 percent to 17 percent.

These are only rough measures of aggregate power and influence, of course, but they convey an essential truth of global politics: that the relative strengths of America’s allies are simply not what they used to be. The question of American decline is often debated today, but what this debate frequently misses is that the decline of U.S. allies has been much starker.

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As I describe in a new report from the Center for Strategic and Budgetary Assessments, the trend is now posing major challenges for American statecraft. Regional military balances in Europe and East Asia are changing in dangerous ways, not just because U.S. adversaries are catching up to the United States, but because they are increasingly overawing U.S. allies. In Eastern Europe, U.S. allies are badly overmatched by Russia; in East Asia, countries from Japan to Taiwan to the Philippines are outstripped by a rising China. These gaps are making America’s traditional role as upholder of these regional orders far more difficult to play. Whereas 20 years ago the United States would have had only to tip the balance in a relatively evenly matched conflict between China and Taiwan, for instance, today it would have to compensate for an enormous military disparity between Beijing and the self-governing island.

Nor is this the only strategic problem. As shown by the relatively paltry military contributions that many traditional U.S. allies have made to the counter-ISIS campaign, military decline is rendering U.S. allies less capable of offering meaningful support in the expeditionary or “out of area” interventions that have been so central to American strategy since the Cold War. Allied decline is also compelling U.S. officials to reconsider the value of some of America’s most longstanding partnerships. One hears little about the “special relationship” these days, precisely because Britain’s severe military decline over the past decade has dramatically reduced its ability to ride shotgun on U.S.-led missions.

To be clear, this decline is no reason to abandon or deliberately undercut America’s alliances. Given the vital role that those alliances have long played in U.S. statecraft, this “cure” would be far worse than the disease. What the United States must do, rather, is to adapt its approach to alliance management in ways that mitigate the geopolitical effects of allied decline and bolster the global order that Washington has long used those alliances to uphold.

In practice, this means focusing on four imperatives. First, the United States should take further steps to wring maximum efficiency out of current U.S. alliances, by encouraging greater defense specialization within NATO, by promoting additional networking of U.S. alliances and partnerships in the Asia-Pacific, and by pushing key allies from Poland to Japan and Taiwan to adopt more resource-efficient defense strategies based on asymmetric and anti-access/area denial capabilities. In Europe and in the Asia-Pacific, such approaches will be vital to stretching scarce resources, promoting greater unity of effort, and sustaining deterrence in the face of challenging military balances.

Second, the United States needs to create stronger incentives for underperforming allies to increase their efforts on defense. In particular, this may mean more explicitly linking improvements in U.S. capabilities in Europe and the Asia-Pacific to greater defense spending and contributions from local allies and partners. This recalls an approach taken in the early 1950s, when the U.S. decision sent several divisions of troops to Europe — but only after the allies agreed to spend more on defense and allow Germany to rearm.

Third, the United States should diversify its geopolitical portfolio by building partnerships with key international “swing states.” Today, power is not simply flowing away from U.S. allies and toward U.S. adversaries. It is also flowing to a range of formally non-aligned countries—from India and Vietnam to Colombia and the United Arab Emirates—that are pursuing increasingly close cooperation with the United States. By deepening strategic relationships with these countries on issues ranging from counter-terrorism to maritime security, the United States can bolster key aspects of the international order and exploit the more favorable aspects of today’s power shifts.

Fourth and finally, the United States will need to emphasize economic statecraft by better aligning trade with geopolitics. Specifically, it will be important to pursue trade agreements that improve economic—and thus strategic—integration within groups made up of key geopolitical partners and prospective partners, and that leave competitors like Russia and China on the outside. At present, unfortunately, the two best vehicles for pursuing this approach—the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership—appear to be either dead or dying. In the future, however, devising ways of pursuing this objective, and taking the other steps outlined here, will be crucial to the United States’ ability to compete effectively in world affairs.

Hal Brands is Henry A. Kissinger Distinguished Professor at Johns Hopkins-SAIS and Senior Fellow at the Center for Strategic and Budgetary Assessments. His most recent book is "Making the Unipolar Moment: U.S. Foreign Policy and the Rise of the Post-Cold War Order."
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